Department Stores in China

PROSPECTS

Department stores diversify their offer to win back shoppers

Department stores came under increasing pressure over the review period due to the competition from e-commerce and efforts by non-grocery specialists to improve their products and services. In an effort to address this department stores operators have looked to provide a more attractive proposition to shoppers.

O2O business model a feature of modern department stores

An O2O business model with the integration of digital technology is seen as key to the survival and future success of department stores. Over half of all department stores operators now also offer e-commerce either through their own websites and/or through third party e-commerce platforms such as Tmall.

Mergers and acquisitions play key role as department stores becomes more consolidated

Another way in which the leading players looked to sustain growth at the end of the review period was through mergers and acquisitions. For example, Intime Retail Group Co Ltd increased its value share at the end of the review period with it acquiring Kaiyuan Retail, while Suning took over 37 Wanda’s Department Store outlets.

COMPETITIVE LANDSCAPE

SKP keeps one foot in the past and one in the future

Beijing Hualian Hypermarket Co Ltd’s legendary SKP chain of department stores was one of the most dynamic players in 2019, with its annual sales setting a new record for the channel in 2018. SKP has retained the traditional business model for department stores, with it cooperating with shopping centres to take advantage of their facilities and services.

Intime fully embraces the digital world

Intime Retail Group Co Ltd continued to see dynamic growth in 2019 with it being one of the most progressive players in the channel in terms of digitalisation. Following its purchase by Alibaba in 2015, Intime began its digitalisation journey.

Smaller players under threat as costs escalate

With rising rental and labour costs brick-and-mortar department stores are finding profits squeezed as more consumers go online. In order to remain competitive players have been forced to upgrade and renovate stores, with additional costs such as design fees and marketing costs.

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